What does CoreLogic’s latest Pain & Gain report tell us about the current state of the property market?

houseSome of Australia’s capital cities were experiencing a fair amount of pain while others saw gains in the last June quarter according to CoreLogic’s latest Pain and Gain report. 

The report revealed that the proportion of all Australian dwellings sold at a loss has risen since the March quarter from 9.3% to 9.5%.

The unit market was hit harder than the housing market with a total of 5.9% of capital city houses selling for a loss compared to 9.5% for units.

Across regional markets, 12.2% of houses & 19.9% of units resold below the previous purchase price.

CoreLogic researcher Cameron Kusher said in the report that houses have typically recorded a superior rate of capital growth compared to units, and those houses reselling at a profit tend to record a much greater profit than units.

“These factors go some way to explaining why units are recording a much higher proportion of loss-making resales than houses,” Mr Kusher said. 

“Another point to consider is ownership – units rather than houses are more likely to be owned by investors. The ability to offset losses on investment properties against future capital gain is likely to provide investors with much more of an incentive to sell at a loss than owner occupiers,” he said. 

It should be noted however that Sydney was the only capital city or regional market which had a lower proportion of units reselling at a loss compared to houses.

Across the country, the overall proportion of loss-making resales increased across each capital city except Melbourne and Canberra for the June quarter. However while losses may be slightly up, they are still at quite low historic levels except for in Perth and Darwin.

The report found that in Perth 20.1% of homes resold at a loss and in Darwin 24.2% of homes resold at a loss, the highest seen since December 2002. This is likely due to these housing markets have strong links with the mining and resources sector.

The remaining capital cities recorded losses at: 2.4% in Sydney, 4.4% in Melbourne, 8.4% in Brisbane, 10.6% in Adelaide, 10.8% in Hobart and 9.6% in Canberra.

The good news is that overall 90.5 per cent of all Australian homes were sold for a profit last quarter, delivering a whopping $15.6 billion in profit and making for an average profit of $262,550 per resale.

More than a quarter (29.4%) of sellers were lucky enough to more than double their previous purchase price.

Again, the Pain and Gain report has highlighted that property is best seen as a long-term investment.

Properties that resold at a loss had an average length of ownership of 6.3 years, whereas properties sold for a profit had an average length of ownership of 10.3 years,

Homes that sold for more than double their previous purchase price were owned for an average of 17.7 years.

To read the full report visit www.corelogic.com.au.